Xcel Energy proposes 2.1 percent natural gas rate increase

Fort Morgan Times staff

Posted:
12/14/2012 04:09:12 PM MST

Updated:
12/17/2012 09:08:40 AM MST

Citing the need to modernize infrastructure to ensure continued reliability and safety for customers of its natural gas and steam operations, Xcel Energy has filed proposals with the Colorado Public Utilities Commission to increase investments in its Colorado natural gas pipeline and steam systems.

This is a multi-year rate plan running through 2015 and reflecting the investments.

"We propose to accelerate replacement of our natural gas pipelines and steam plant to ensure safe and reliable operations, both now and in the future," said David Eves, president and CEO of Public Service Co. of Colorado, an Xcel Energy company. "Now is the opportune time for such investments, as we can take advantage of historically low financing costs and low wholesale natural gas prices. Taken together, this plan will greatly benefit Colorado while still keeping rates competitive for our customers."

The company seeks a 2013 annual increase of $40.4 million for its natural gas operations. If approved, new rates would take effect in August, increasing 2013 bills by 2.1 percent for the average residential customer.

To reflect the ongoing investments and to provide greater price predictability for customers, the company for the first time seeks to establish annual rates through 2015 for natural gas operations. If the plan is approved, residential customers would see net average annual increases of 3.6 percent over this three-year period.

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"We have had success in providing longer-term price transparency for our electric customers through the multi-year rate plan approved by the CPUC earlier this year," Eves said. "We believe providing similar plans and certainty for our natural gas and steam operations will likewise benefit our customers, particularly as we undertake significant investments on their behalf."

Driving this request are Xcel Energy's aggressive efforts to modernize its natural gas pipelines across the state, many of which are more than 50 years old and are reaching the end of their useful lives. This accelerated approach will allow the company to improve the reliability of its natural gas system in a comprehensive and efficient manner.

The company is also undertaking pipeline investments to support implementation of Colorado's Clean Air Clean Jobs program, which includes conversion of the Cherokee coal-fired power plant to natural gas.

While the investments add to customer costs, Eves said that Xcel Energy's overall rates remain very competitive.

"Our natural gas rates are among the lowest in the nation. Even after these proposed increases, our rates will compare favorably and will supply competitively priced energy to help fuel Colorado's economy," he said.

Low wholesale natural gas prices also help to mitigate the customer impact of the investments. Xcel Energy passes the cost of natural gas directly to customers on a dollar-for-dollar basis, so that when wholesale prices decline, customers directly benefit. Natural gas prices have declined significantly since 2008, and prices are predicted to remain relatively low, which will help keep customers' total bills low. In addition, the company has programs to help customers conserve use of natural gas and manage bills.

Additional information on the filings is available on the Xcel Energy Web site, xcelenergy.com.

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